BANK FIRST CORPORATION
TABLE OF CONTENTS
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| PART I | | 7 | |
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| | Item 1. | Business | 7 |
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| | Item 1A. | Risk Factors | 22 |
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| | Item 1B. | Unresolved Staff Comments | 38 |
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| | Item 1C. | Cybersecurity | 38 |
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| | Item 2. | Properties | 41 |
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| | Item 3. | Legal Proceedings | 42 |
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| | Item 4. | Mine Safety Disclosures | 42 |
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| PART II | | 43 | |
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| | Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 43 |
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| | Item 6. | Reserved | 44 |
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| | Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 45 |
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| | Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 68 |
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| | Item 8. | Financial Statements and Supplementary Data | 70 |
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| | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 116 |
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| | Item 9A. | Controls and Procedures | 116 |
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| | Item 9B. | Other Information | 117 |
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| | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 117 |
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| PART III | | 118 | |
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| | Item 10. | Directors, Executive Officers and Corporate Governance | 118 |
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| | Item 11. | Executive Compensation | 118 |
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| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 118 |
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| | Item 13. | Certain Relationships and Related Transactions, and Director Independence | 118 |
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| | Item 14. | Principal Accounting Fees and Services | 119 |
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| PART IV | | 119 | |
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| | Item 15. | Exhibits, Financial Statement Schedules | 119 |
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| | | Signatures | 122 |
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In this Annual Report on Form 10-K (this “Annual Report”), references to “we,” “our,” “us,” “Bank First” or “the Company” refer to Bank First Corporation, a Wisconsin corporation, and our wholly-owned banking subsidiary, Bank First, N.A., a national banking association, unless otherwise indicated or the context otherwise requires. References to “Bank” refer to Bank First, N.A., our wholly-owned banking subsidiary.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this Annual Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include statements relating to our projected growth, anticipated future financial performance, financial condition, credit quality and management’s long-term performance goals, as well as statements relating to the anticipated effects on our business, financial condition and results of operations from expected developments or events, our business, growth and strategies. These statements, which are based on certain assumptions and estimates and describe our future plans, results, strategies and expectations, can generally be identified by the use of the words and phrases “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim,” “predict,” “continue,” “seek,” “projection” and other variations of such words and phrases and similar expressions.
These forward-looking statements are not historical facts, and are based upon current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. The inclusion of these forward-looking statements should not be regarded as a representation by us or any other person that such expectations, estimates and projections will be achieved. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict and that are beyond our control. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date of this Annual Report, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:
| ● | the impact of current and future economic and market conditions generally (including seasonality), both domestic and international, and in the financial services industry, nationally and within our primary market areas (particularly Wisconsin and the Stateline region of Illinois), including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior (including the velocity and levels of deposit withdrawals and loan repayment) and credit risk as a result of the foregoing; |
| ● | the potential impacts of adverse developments in the banking industry or as encountered by other financial institutions that adversely affect the Company and including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto (including increases in the cost of our deposit insurance assessments), the Company’s ability to manage its liquidity risk and any growth plans, and the availability of capital and funding; |
| ● | governmental monetary and fiscal policies, including interest rate policies of the FRB, as well as risk related to legislative, tax and regulatory changes, including those that impact the value of the U.S. Dollar in relation to the currencies of other advanced and emerging market countries, the money supply and inflation; |
| ● | the risks of continued changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities and market fluctuations, and interest rate sensitive assets and liabilities; |
| ● | interest rate risks (including the impact of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), sensitivities, and the shape of the yield curve; |
| ● | prolonged periods of inflation and their effects on our business, profitability, and our stock price; |
| ● | changes in borrower credit risks and payment behaviors, including the ability for borrowers under deferred payment programs to return to making full payments; |
| ● | changes in the availability and cost of credit and capital in the capital markets; |
| ● | changes in the prices, values and sales volumes of residential and commercial real estate, especially as they relate to the value of collateral supporting the Company’s loans; |
| ● | the concentration of our business within our geographic areas of operation; |
| ● | the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; |
| ● | the risk that our asset quality may deteriorate or that our allowance for credit losses may prove to be inadequate or may be negatively affected by credit risk exposures; |
| ● | the effects of competition (including the inability to grow, or attrition of deposits, customers and employees) from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, private credit funds, money market and other mutual funds and other financial institutions; |
| ● | our ability to realize the expected benefits from our strategic initiatives or other operational and execution goals in the time period expected, which could negatively affect our future profitability; |
| ● | risks relating to bank acquisitions, including the recent Centre acquisition, include, without limitation: the diversion of management's time on issues related to the integration; unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following acquisitions being lower than expected; the risk of deposit and customer attrition; regulatory enforcement and litigation risk; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets; |
| ● | the risk that we may not be able to identify suitable bank and non-bank acquisition opportunities as part of our growth strategy and even if we are able to identify attractive acquisition opportunities, we may not be able to complete such transactions on favorable terms or realize the anticipated benefits from such acquisitions; |
| ● | the Company’s ability to comply with any regulatory requirements and the risk that the regulatory environment may not be conducive to or may prohibit or delay the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit; |
| ● | risks related to our implementation of new lines of business, new products and services, new technologies, and expansion of our existing business opportunities; |
| ● | our ability to maintain our operating efficiency; |
| ● | failure to keep pace with technological change or difficulties when implementing new technologies; |
| ● | changes in technology or products that may be more difficult, costly, or less effective than anticipated; |
| ● | our ability to attract and maintain business banking relationships with well-qualified businesses, real estate developers and investors with proven track records in our market areas; |
| ● | our ability to attract sufficient loans that meet prudent credit standards, including in our commercial and industrial and owner-occupied commercial real estate loan categories; |
| ● | our ability to comply with applicable capital and liquidity requirements, including our ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; |
| ● | statutory and regulatory dividend restrictions; |
| ● | the impact on the valuation of the Company’s investments due to market volatility or counterparty payment risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business; |
| ● | restrictions or limitations on access to funds from historical and alternative sources of liquidity could adversely affect our overall liquidity, which could restrict our ability to make payments on our obligations and our ability to support asset growth and sustain our operations and the operations of the Bank; |
| ● | inability of our risk management framework to manage risks associated with our business; |
| ● | our business relationships with, and reliance upon, third parties that have strategic partnerships with us or that provide key components of our business infrastructure, including the costs of services and products provided to us by third parties, and disruptions in service or financial difficulties with a third-party vendor or business relationship; |
| ● | our ability to oversee the performance of third-party service providers that provide material services to our business; |
| ● | our ability to maintain expenses in line with current projections; |
| ● | our dependence on our management team and our ability to motivate and retain our management team; |
| ● | our ability to attract and retain qualified employees; |
| ● | our ability to maintain adequate internal controls over financial reporting; |
| ● | fraudulent and negligent acts by our clients, employees or vendors, which we may not be able to prevent, detect or mitigate; |
| ● | our ability to identify and address potential cybersecurity risks, which may be exacerbated by recent developments in generative artificial intelligence, including brute force attacks (i.e., credential stuffing), ransomware or other malware, “denial-of-service” attacks, “hacking” and identify theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation; |
| ● | increased credit losses or impairment of goodwill and other intangibles; |
| ● | potential or actual claims, damages, penalties, fines, costs, unexpected outcomes, and reputational damage resulting from new, existing, pending or future litigation, regulatory proceedings and enforcement actions; |
| ● | changes in accounting policies, rules and practices; |
| ● | the impact of recent and future legislative and regulatory changes; |
| ● | uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the outlook for future economic growth, including the ongoing and potential expansion of U.S. tariffs and related retaliatory measures, which increase uncertainty and volatility in global and domestic economic conditions; |
| ● | the effects of war, regime change, civil unrest, or other conflicts, acts of terrorism, natural disasters, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs; |
| ● | risks related to diversity, equity and inclusion (“DEI”) and environmental, social and governance (“ESG”) strategies and initiatives, the scope and pace of which could alter Bank First’s reputation and shareholder, associate, customer and third-party affiliations or result in litigation in connection with anti-DEI and anti-ESG laws, rules or activism; |
| ● | action or inaction by the federal government, including as a result of any prolonged government shutdown or government intervention in the U.S. financial system and those related to credit card interest rates; |
| ● | legislative, regulatory or supervisory actions related to so-called “debanking,” including any new prohibitions, requirements, or enforcement priorities that could affect customer relationships, compliance obligations or operational practices; and |
| ● | other factors and risks described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections herein. |
The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Annual Report, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us.
